Airtel, RCom losing revenue share; Idea, Vodafone gaining

Bharti Airtel and Reliance Communications (RCom), India’s largest and second-largest mobile telephony operators, respectively, have been winners in adding subscribers by the millions over the last two years, but it turns out they have been losers when it comes to defending revenue turf.

Besides the new telecom players that entered the market post-2008, Idea Cellular and Vodafone have gained market share during the same period, data from Telecom Regulatory Authority of India show.

Since March 2009, for Airtel — still a market leader both in terms of revenue and subscribers — revenue market share slipped 260 basis points from 32.7% to 30.1% in the just concluded quarter. The same for RCom slipped 170 basis points from 11.5% to 9.8% during the same period.

One basis point is one hundredth of a percentage point.
A Bharti spokesperson did not respond to emailed queries from DNA.

“The fall in Airtel’s revenue market share may be partly explained by the market itself expanding but it is also true that competitors such as Idea Cellular starting operations
in newer circles and thus growing revenues,” said Archit Singhal, telecom analyst with brokerage Jaypee Capital.

“Also revenue growth may not always follow subscriber growth because not all of the SIMs sold remain active subscribers,” said Singhal.

To be sure, Airtel grew its absolute revenues by 7.3% — from Rs8,896 crore in March 2009 quarter to Rs9,541 crore in the just concluded quarter — but market grew at a faster clip of 16.5% — from Rs27,193.5 crore to Rs31,674.6 crore, during the quarter, according to Trai.

“Bharti continues to lead the market with revenue share of 30.1% even though the company saw revenue share decline in all service areas,” telecom analysts Suresh A Mahadevan and Varun Ahuja with UBS Securities India, the local brokerage arm of the multinational bank, wrote investors in a note on Wednesday.

Idea increased its revenue market-share by 190 basis points from 11.7% to 13.6%, while Vodafone saw its share growing 120 basis points from 20.2% to 21.4%.

In metros, Bharti’s revenue share fall — from 28.2% to 24.3% — is quite pronounced, as is the case in rural areas, or category C cities, where it fell from nearly 35% to 27% between March 2009 and now.

“It is too early to say whether clear winners and clear laggards are emerging, as the competitive dynamics is still playing out,” said Jaypee’s Singhal.

“The National Telecom Policy, expected some time around August, will bring in some clarity on rules around sector consolidation and that would have a significant impact on where market share numbers settle for each of the larger players.”